Canadian bond dips

Interest-rate sensitive short-dated Canadian bond prices fell on Friday, as the stronger-than-expected data affirmed growing expectations of interest rate increases and despite a global flight to safety stemming from tensions about Greece's debt burden.
The two-year government bond dropped 13 Canadian cents to C$99.78 to yield 1.618 percent, while the 10-year bond shed 31 Canadian cents to C$102.05 to yield 3.487 percent. Yields on overnight index swaps, which trade based on expectations for the Bank of Canada's key policy rate, rose after the report, showing the market saw tightening as more likely than before the data. Canadian bonds mostly underperformed against their US counterparts. The difference between 10-year yields narrowed 2.3 basis points to 20.8 basis points.